Green Bonds:
Impactful investments
with strong returns

Individuals and companies worldwide are recognising the importance of reducing their carbon emissions. As a result, many are reducing their carbon footprint through energy efficiency and other measures. However, it is impossible to achieve net zero by only reducing your carbon footprint.

There is a need for a flexible and scalable mechanism to achieve these ambitious goals. This is where carbon dioxide (CO₂) offsetting or compensation comes in. It is a way to give back to nature. Carbon units (or carbon credits) allow entities to neutralise their emissions through nature-based solutions. It can be focused on reforestation, afforestation, ecosystem restoration, and other projects that directly affect nature, communities, and wildlife.

Why invest in green bonds? Companies and individuals are keen to contribute to the environment. Carbon and biodiversity credits help individuals and companies turn their values into a tangible action plan and give back to nature at scale. Green bonds fund these vital nature-based projects that produce carbon units.

While there is interest from a Corporate Social Responsibility (CSR) point of view in contributing to nature conservation, this interest has increased over the past years due to the need to reduce and offset carbon emissions. CO₂ offsetting is done either on a mandatory or voluntary basis for CSR and public relations.

DGB Group verifies its carbon dioxide (CO₂) compensation according to Verified Carbon Standard (VCS) methods. The VCS programme is the world's most widely used voluntary carbon-offset programme. Nearly 1,700 certified VCS projects have collectively reduced or removed more than 630 million tonnes of CO₂ and other greenhouse gas emissions from the atmosphere. 

Projects developed under the VCS programme must pass a rigorous review process to be certified. VCS projects cover many sectors, including renewable energy, such as wind and hydropower projects, forestry, deforestation prevention, and others. 

The VCS standard specifies the rules and requirements that all projects must meet to be certified. In addition, all VCS projects are subject to desk and field audits by qualified independent third parties and Verra personnel to ensure standards are met and methodologies are correctly applied.

Projects are assessed against a technically sound greenhouse gas emission reduction quantification method specific to that project type.

We also very certain projects according to the Gold Standard, ensuring the project is executed with the highest standards. This guarantees that the project is transparent and verifiable, demonstrates real outcomes, and has positive social and environmental impacts.

We check all our projects for additionality, sustainability, and non-leakage.

• Additionality: Additionality requires the forest project to sequester more carbon dioxide (CO₂) than in a 'business as usual' scenario. The project must demonstrate that the carbon sequestration would not have happened without the development of the specific offsetting project.
  
  
• Sustainability: Sustainability requires that greenhouse gas (GHG) removal improvements be maintained for up to 100 years. To demonstrate sustainability, each project must undergo external verification of inventory reports and a site visit every six years during the project life (±25 years).
  
  
• Non-leakage: Leakage from carbon offset projects occurs when the reduction of GHGs in one area results in an unintended increase in GHG emissions in another location. Project managers must demonstrate that their project does not cause excessive leakage, essentially wiping out the increase in GHG removal from their project.

The voluntary markets are the general name for all voluntary verified carbon emission reduction offsets. The main objective for acquiring Verified Emission Reduction (VER) credits is to neutralise your carbon footprint, mainly motivated by Corporate Social Responsibility (CSR) and public relations.

The Voluntary Carbon Market allows private investors, governments, non-governmental organisations, and businesses to purchase carbon credits to offset their hard-to-abate emissions voluntarily. Companies can purchase carbon offsets from verified suppliers to neutralise their environmental impact.

As efforts increase to make the global economy carbon neutral, the demand for voluntary carbon offsets could continue to rise. Based on the stated demand for carbon credits and demand forecasts from experts researched by the Taskforce on Scaling Voluntary Carbon Markets (TSVCM), McKinsey & Company estimates that the annual global demand for carbon credits could reach as much as 1.5 to 2.0 gigatonnes of carbon dioxide (GtCO₂) in 2030 and 7 to 13 GtCO2 in 2050.

Depending on different price scenarios and their underlying drivers, the market size in 2030 could be between $5 billion and $30 billion on the low side and over $50 billion on the high side. while the primary market of the voluntary carbon offsetting market is expected to be worth up to €100 billion by 2030.

The TSVCM, sponsored by the Institute of International Finance (IIF), estimates that the demand for carbon credits could increase by a factor of 15 or more by 2030 and by a factor of 100 by 2050.

The price of one tonne of carbon dioxide (CO₂) differs per type of CO₂ compensation and changes depending on the underlying projects. The most important factors in determining the price of a carbon credit are: 

• Type of project (afforestation/reforestation, avoided conversion, or improved forest management).
• Project vintage (the year of compensation).
• Additionality (Additionality requires the forest project to sequester more CO₂ than in a 'business as usual' scenario. The project must demonstrate that the CO₂ sequestration would not have happened without the development of the specific offsetting project.) 
• Project location.
• Community aspects.
• Biodiversity aspects.

The main difference is between avoidance-type offsets and removal-type offsets. Both offsets are essential for conservation. Avoidance offsets ensure the existence of more emission-efficient businesses. In contrast, removal offsets increase the Earth's storage capacity beyond our natural wild forests and gardens.

We invite companies and organisations worldwide to take joint action in protecting and restoring nature, biodiversity, and ecosystems. We are confident that the highest impact is created only when we work together for a safe and healthy planet for generations to come. 

Below we've outlined some of the great case studies about companies compensating for their carbon emissions through the voluntary carbon market:

• Starbucks: https://www.green.earth/carbon-offset/companies/starbucks
• Unilever: https://www.green. earth/carbon-offset/companies/unilever
• Marley Spoon: https://www.green.earth/carbon-offset/companies/marley-spoon
• ING Group: https://www.green.earth/carbon-offset/companies/ing-groep
• Aegon: https://www.green.earth/carbon-offset/companies/aegon
• Adyen: https://www.green.earth/carbon-offset/companies/adyen
• Lidl: https://www.green.earth/carbon-offset/company/lidl
  
  

Investing in green bonds allows you to support environmentally friendly projects while also earning financial returns. Green bonds fund initiatives such as renewable energy, energy efficiency, and nature-based solutions like reforestation and biodiversity conservation.

They offer a sustainable way to diversify your investment portfolio and contribute to positive environmental impacts. Additionally, investors may enjoy tax advantages and incentives, making green bonds an attractive option for those seeking both economic and environmental benefits. By investing in green bonds, you're playing an active role in the transition to a low-carbon economy.